Canada likely to greenlight Glencore-Teck deal despite greater scrutiny of foreign deals
By Divya Rajagopal
TORONTO (Reuters) — As Glencore (OTC:GLNCY) prepares for a long grind to convince Canada of the virtues of the Swiss trader-led consortium's $9 billion bid for Teck Resources (NYSE:TECK)' coal unit, investors and lawyers are optimistic about the deal approval despite the government's increased scrutiny of foreign investments.
In recent years, Canada has tightened the Investment Canada Act (ICA), the main tool the government uses to review inbound deals to ensure transactions are not harmful to national security.
Glenore CEO Gary Nagle's initial bid for the entire Teck Resources faced stiff opposition from Justin Trudeau's Liberal government and from the premier of British Columbia, where the company is based. Teck twice rebuffed Glencore's overtures.
On Tuesday, the federal innovation ministry declined to specifically comment on Glencore's bid, citing confidentiality provisions of the Act, but said any transaction involving a Canadian company and a foreign company would be subject to a review under the ICA.
«All regulatory processes will be followed regarding review of the proposal,» Finance Minister Chrystia Freeland said during a conference. «The government concern remains to protect Canadian jobs, environmental issues, rights of indigenous people; Teck is important for Canada and they are a champion for Canada.»Greg McNab, a partner with law firm Dentons who specializes in the energy and mining sector, said he expects the deal to be approved by the government.
«Canadian government makes lot of tax revenues from coal, but it does not want to be seen as blocking the sale of those assets to someone else, at least from the public policy perspective,» McNab added.
After seven months of pitched battle,
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